Differences Between Micro and Macro Environment.

Summary

This video explains the differences between micro and macro environments in business. The micro environment directly interacts with a business and includes factors like competitors, suppliers, and customers. On the other hand, the macro environment refers to broader, uncontrollable factors such as political, economic, and social conditions that impact all businesses. The video also outlines the specific elements of both environments, their controllability, and how they influence business strategies and operations. Key points include the concepts of cosmic and vessel analysis for studying micro and macro environments, respectively.

Takeaways

• 😀 Micro environment is the environment in direct contact with a business, affecting its daily activities.
• 😀 Macro environment is the broader economic environment that influences all business organizations.
• 😀 Micro environment is specific to individual businesses, while macro environment affects all businesses collectively.
• 😀 The study of micro environment is called COSMIC analysis (Competitors, Organization, Suppliers, Market intermediaries, and Customers).
• 😀 The study of macro environment is called VESSEL analysis (Political, Economic, Socio-cultural, Technological, Legal, and Environmental factors).
• 😀 Micro environment factors are specific to a business, whereas macro environment factors are general in nature.
• 😀 Micro environment factors are controllable by the business, but to a limited extent, while macro environment factors are uncontrollable.
• 😀 Elements of the micro environment have a direct and regular impact on a business.
• 😀 Elements of the macro environment impact businesses more indirectly and irregularly.
• 😀 The micro environment is crucial for day-to-day operations, while the macro environment influences long-term decision-making and strategies.

Q & A

What is the main difference between micro and macro environments in business?

The main difference is that the micro environment refers to the immediate environment in contact with the business, affecting its daily operations directly, while the macro environment is a broader, general environment that influences all businesses within the economy.

What is meant by the term 'micro environment' in business?

The micro environment refers to the factors or elements that are in direct contact with a business and can directly influence its daily activities. This includes competitors, suppliers, customers, and market intermediaries.

How does the macro environment affect businesses?

The macro environment affects businesses by influencing their overall performance, decision-making, and strategies. This environment is not specific to any one firm but impacts all businesses through factors like political, economic, socio-cultural, technological, legal, and environmental changes.

What does the acronym 'COSMIC' stand for in the context of the micro environment?

'COSMIC' stands for Competitors, Organization, Suppliers, Market intermediaries, and Customers. These are the key elements of the micro environment that businesses need to analyze and manage.

What does the acronym 'PESTLE' represent in the macro environment?

'PESTLE' stands for Political, Economic, Socio-cultural, Technological, Legal, and Environmental factors. These are the key elements that make up the macro environment and influence businesses on a larger scale.

Why are the factors of the micro environment considered controllable by businesses?

The factors in the micro environment, such as suppliers and customers, can be controlled to some extent by the business. For example, a company can choose its suppliers or target market, influencing its operations and outcomes.

Can businesses control the elements of the macro environment?

No, businesses cannot control the elements of the macro environment. These factors, such as economic trends or political decisions, are beyond the control of any individual business but still significantly impact their operations.

What is the study of the macro environment known as, and what does it focus on?

The study of the macro environment is called 'PESTLE analysis.' It focuses on analyzing the political, economic, socio-cultural, technological, legal, and environmental factors that affect all businesses.

How do micro environmental factors affect businesses compared to macro environmental factors?

Micro environmental factors affect businesses directly and regularly on a day-to-day basis, influencing immediate decisions and operations. In contrast, macro environmental factors impact businesses in a more general, less frequent way, but they influence long-term strategies and performance.

What is the nature of the elements in the micro environment compared to the macro environment?

The elements of the micro environment are specific and closely related to the individual business, while the elements of the macro environment are more general and affect the entire business landscape.